The Inequality— Financial Markets Nexus: Implications for Developing Metrics for Voluntary Disclosures

Can a disclosure framework reduce overall socio-economic inequality, or will it shift inequality somewhere else, for example, to other firms, other regions, or out of the firm and the private sector and into households? Are there material regional variations in the perceptions of the causes and effects of socioeconomic inequality? What is the appropriate level of focus for an inequality disclosure framework? Surplus generated by workers accrues to the owners of capital and, at the most basic level, is a significant contributor to socio-economic inequality.

There is also inequality in income between workers within firms and sectors. Furthermore, inequality is produced by changes in asset prices, and by differences in sovereign investing, among other factors. The correct unit of analysis for the Taskforce deserves attention. The authors of this paper underscore a point of the TIFD proposition that regional variations mean that a one-size-fits-all disclosure framework is unlikely to be appropriate. The distribution of informal employment needs to be considered, with 61% of all global employment being informal and as much as 90% of employment being informal in the global South.

While disclosure frameworks matter for formal companies, what is often overlooked in the development of disclosure frameworks are the implications for the large number of people, particularly in the global South, who are informally employed or who work in informal enterprises. A second consideration is high unemployment given that the distribution of labour income is one of the great drivers of income inequality. Furthermore, the growth of precarious and nonstandard employment, with the rise of platform work as an example, is an additional concern.